Within the vast spectrum of financial instruments, preferred stocks (or preferreds)

occupy a unique place. Because of their characteristics, they straddle the line
between stocks and bonds. Technically, they are equity securities, but they share
many characteristics with debt instruments. Some investment commentators refer to
them as hybrid securities. In this article, we provide a thorough overview of preferred
shares and compare them to some better-known investment vehicles.

Because so much of the commentary about preferreds compares them to bonds and
other debt instruments, let's first look at the similarities and differences between
preferreds and bonds.

Bonds and Preferreds: Similarities

Interest Rate Sensitivity

Preferreds are issued with a fixed par value and pay dividends based on a
percentage of that par at a fixed rate. Just like bonds, which also make fixed
payments, the market value of preferred shares is sensitive to changes in interest
rates. If interest rates rise, the value of the preferred shares would need to fall to
offer investors a better rate. If rates fall, the opposite would hold true. However, the
relative move of preferred yields is usually less dramatic than that of bonds. (For
further reading, check out Trying To Predict Interest Rates.)

Callability
Preferreds technically have an unlimited life because they have no fixed maturity
date, but they may be called by the issuer after a certain date. The motivation for the
redemption is generally the same as for bonds; a company calls securities that pay
higher rates than what the market is currently offering. Also, as is the case with
bonds, the redemption price may be at a premium to par to enhance the preferred's
initial marketability. (To read more, see Call Features: Don't Get Caught Off Guard.)

Senior Securities
Like bonds, preferreds are senior to common stock; however, bonds have more
seniority than preferreds. The seniority of preferreds applies to both the distribution
of corporate earnings (as dividends) and the liquidation of proceeds in case of
bankruptcy. With preferreds, the investor is standing closer to the front of the line for
payment than common shareholders, although not by much.

Convertibility
As with convertible bonds, preferreds can often be converted into the common stock
of the issuing company. This feature gives investors flexibility, allowing them to lock
in the fixed return from the preferred dividends and, potentially, to participate in
the capital appreciation of the common stock. (For further reading, see Introduction
To Convertible Preferred Shares and Convertible Bonds: An Introduction.)

Ratings
Like bonds, preferred stocks are rated by the major credit rating companies, such as
Standard & Poor's and Moody's. The rating for preferreds is generally one or two
tiers below that of the same company's bonds because preferred dividends do not
carry the same guarantees as interest payments from bonds and they are junior to
all creditors. (For more insight, read What Is A Corporate Credit Rating?)
Bonds and Preferreds: Differences Type of Security
As observed earlier, preferred stock is equity; bonds are debt. Most debt
instruments, along with most creditors, are senior to any equity.

Payments
Preferreds pay dividends. These are fixed dividends, normally for the life of the
stock, but they must be declared by the company's board of directors. As such, there
is not the same array of guarantees that are afforded to bondholders. This is
because bonds are issued with the protection of an indenture. With preferreds, if a
company has a cash problem, the board of directors can decide to withhold preferred
dividends; the trust indenture prevents companies from taking the same action on
bonds. Another difference is that preferred dividends are paid from the company's
after-tax profits, while bond interest is paid before taxes. This factor makes it more
expensive for the issuing company to issue and pay dividends on preferred stocks.
(To read more, see How And Why Do Companies Pay Dividends?)

Yields
Computing current yields on preferreds is similar to performing the same calculation
on bonds: the annual dividend is divided by the price. For example, if a preferred
stock is paying an annualized dividend of $1.75 and is currently trading in the market
at $25, the current yield is: $1.75/$25 = 7%. In the market, however, yields on
preferreds are typically higher than those of bonds from the same issuer, reflecting
the higher risk the preferreds present for investors.

Volatility
While preferreds are interest rate sensitive, they are not as price sensitive to interest
rate fluctuations as bonds. However, their prices do reflect the general market
factors that affect their issuers to a greater degree than the same issuer's bonds.

Accessibility for the Average Investor

Information about a company's preferred shares is easier to access than information
about the company's bonds, making preferreds, in a general sense, easier to trade
(and perhaps more liquid). The low par values of the preferred shares also make
investing easier because bonds, with par values around $1,000, often have minimum
purchase amounts (i.e. five bonds).

Common and Preferred Stocks: Similarities

Payments
Both common and preferred stocks are equity instruments that pay dividends from
the company's after-tax profits.

Common and Preferred Stocks: Differences

Payments
Preferreds have fixed dividends and, although they are never guaranteed, the issuer
has a greater obligation to pay them. Common stock dividends, if they exist at all,
are paid after the company's obligations to all preferred stockholders have been
satisfied.

Appreciation
This is where preferreds lose their luster for many investors. If, for example, a
pharmaceutical research company discovers an effective cure for the flu, its common
stock will soar, while the preferreds in the same company might only increase by a
few points. The lower volatility of preferred stocks may look attractive, but preferreds
will not share in a company's success to the same degree as common stock. (To
learn more, read 5 Signs Of A Market-Beating Stock.)

Voting
Whereas common stock is often called voting equity, preferred stocks usually have
no voting rights.

Types of Preferred Stock

Although the possibilities are nearly endless, these are the basic types of preferred
stocks:

Cumulative: Most preferred stock is cumulative, meaning that if the company

withholds part (or all) of the expected dividends, these are considered
dividends in arrears and must be paid before any other dividends. Preferred
stock that doesn't carry the cumulative feature is called straight,
or noncumulative, preferred.
Callable: The majority of preferred shares are redeemable, giving the issuer
the right to redeem the stock at a date and price specified in the prospectus.
Convertible: The timing for conversion and the conversion price specific to the
individual issue will be laid out in the preferred stock's prospectus.
Participating: Preferred stock has a fixed dividend rate. If the company
issues participating preferreds, those stocks gain the potential to earn more
than their stated rate. The exact formula for participation will be found in the
prospectus. Most preferreds are non-participating.
Adjustable-Rate Preferred Stock (ARPS): These relatively recent additions to
the spectrum pay dividends based on several factors stipulated by the
company. Dividends for ARPSs are keyed to yields on U.S. government
issues, providing the investor limited protection against adverse interest rate
markets.

Why Preferreds?
A company may choose to issue preferreds for a couple of reasons:

Flexibility of payments: Preferred dividends may be suspended in case of

corporate cash problems.
Easier to market: The majority of preferred stock is bought and held by
institutions, which may make it easier to market at the initial public offering.
Institutions tend to invest in preferred stock because IRS rules
allow U.S. corporations that pay corporate income taxes to exclude 70% of the
dividend income they receive from their taxable income. This is known as
the dividend received deduction, and it is the primary reason why investors in
preferreds are primarily institutions.

The fact that individuals are not eligible for such favorable tax treatment should not
automatically exclude preferreds from consideration. In many cases, the individual
tax rate under the new rules is 15%. That compares favorably with paying taxes at
the ordinary rate on interest received from corporate bonds. However, because the
15% rate is not an across-the-board fact, investors should seek competent tax
advice before diving into preferreds.

Preferred Stock Pros

Higher fixed-income payments than bonds or common stock

Lower investment per share compared to bonds
Priority over common stocks for dividend payments and liquidation proceeds
Greater price stability than common stocks
Greater liquidity than corporate bonds of similar quality

Preferred Stock Cons

Callability
Lack of specific maturity date makes recovery of invested principal uncertain
Limited appreciation potential
Interest rate sensitivity
Lack of voting rights

An individual investor looking into preferred stocks should carefully examine both
their advantages and drawbacks. There are a number of strong companies in stable
industries that issue preferred stocks that pay dividends above investment-
grade bonds. The starting point for research on a specific preferred is the stock's
prospectus, which you can often find online. If you're looking for relatively safe
returns, you shouldn't overlook the preferred stock market. (To learn more, see Is
Your Portfolio Light On Stocks? It May Be Time For A Switch.)

Read more: Preferred Stock

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Ayala Land Inc.
Per the Prospectus dated July 18, 2013.

Preferred Shares

The Companys preferred shares prior to 2012 were subscribed and issued through a stock rights
offer with the following features:

(a) non-voting;
(b) dividend rate of 4.64% p.a., payable annually, noncumulative;
(c) nonparticipating;
(d) convertible at the option of the holder at a ratio of one (1) preferred share to one (1) common
share commencing on the 10th year from issue date at an exercise price equivalent to the higher of
(i) the 30-day average closing price or (ii) closing price of common shares immediately preceding the
exercise date, less the par value of the preferred shares;
(e) no pre-emptive rights;
(f) non-redeemable;
(g) non-listed; and,
(h) preferred in liquidation to the extent of par value.

The dividends for preferred shares are declared upon the sole discretion of the Companys BOD.

On February 20, 2012, the BOD approved the following restructuring exercise in order to comply
with the regulatory requirement on Filipino-ownership following the Supreme Courts ruling that
nonvoting shares do not count as equity when computing for a companys Filipino-ownership
level:

a. Redemption and retirement of the 13.0 billion outstanding preferred shares.

b. Reclassification of the 1.97 billion unissued preferred shares to voting preferred shares
through an amendment of Article Seventh of the Articles of Incorporation.
c. Increase in authorized capital stock by P=1.3 billion creating new voting preferred shares and a
stock rights offer of 13.0 billion voting preferred shares from the increase in the authorized
capital stock.

On April 18, 2012, the stockholders ratified the BOD resolution on the capital restructuring. The
voting preferred shares shall have the following features, rights, and privileges (a) voting; (b)
dividend rate of 4.74786% per annum, equivalent to 90% of the 10-year PDST R2 (repriced every
ten (10) years from issue date), payable annually, non-cumulative (c) convertible at the option of
the holder at a ratio of one (1) voting preferred share to one (1) common share commencing on the
10th year from issue date at an exercise price equivalent to the higher of (i) the 30-day average
closing price or (ii) closing price of common shares immediately preceding the exercise date, less
the par value of the preferred shares; (d) no pre-emptive rights; (e) redeemable at par at the sole
option of the corporation; (f) non-listed; and, (g) preferred in liquidation to the extent of par value.
Petron Corporation
Prospectus dated February 10, 2010

The Preferred Shares

General Features
The Preferred Shares shall have the following features, rights and privileges:
The Offer Price of the Preferred Shares will be determined at the time of issuance;
The dividend rate of the Preferred Shares will be determined at the time of issuance;
Cumulative in payment of current dividends as well as any unpaid back dividends;
Non-convertible into common shares;
Preference over holders of common stock in the distribution of corporate assets in the
event of dissolution and liquidation of the Company and in the payment of the dividend at
the rate specified at the time of issuance;
Non-participating in any other or further dividends beyond the dividends specifically
payable on the Preferred Shares;
Non-voting except in those cases specifically provided by law;
No pre-emptive rights to any subsequent issue of the Companys shares; and
Redeemable at the option of the Company under such terms as the Board may approve at
the time of the issuance of the Preferred Shares.

The holders of the Preferred Shares do not have identical rights and privileges with holders of the
existing common shares of the Company.

Features Specific or Particular to the Preferred Shares

Following are certain features specific or particular to the Preferred Shares.

In General: No Voting Rights

The Preferred Shares shall have no voting rights except as specifically provided by the Corporation
Code. Thus, holders of the Preferred Shares shall not be eligible, for example, to vote for or elect
the Companys Directors or to vote for or against the issuance of a stock dividend. Holders of
Preferred Shares, however, may vote on matters which the Corporation Code considers significant
corporate acts that may be implemented only with the approval of shareholders, including those
holding shares denominated as non-voting in the articles of incorporation. These acts, which require
the approval of shareholders representing at least two-thirds of the issued and outstanding capital
stock of the Company in a meeting duly called for the purpose, are as follows:
Amendment of the Articles (including any increase or decrease of capital stock);
Amendment of the Companys By-laws;
Sale, lease, exchange, mortgage, pledge or other disposition of all or a substantial part of the
Companys assets;
Incurring, creating or increasing bonded indebtedness;
Increase or decrease of capital stock;
Merger or consolidation of the Company with another corporation or corporations; and
Investment of corporate funds in any other corporation or business or for any purpose other
than the primary purpose for which the Company was organized; and
Dissolution of the Company.

Dividend Policy In Respect of the Preferred Shares

The declaration and payment of dividends on each Dividend Payment Date will be subject to the
sole and absolute discretion of the Board to the extent permitted by law. As and if dividends are
declared by the Board, dividends on the Shares shall be at a fixed rate of 9.5281% per annum
calculated in respect of each Share by reference to the Offer Price thereof in respect of each
Dividend Period.

Unless the Preferred Shares are redeemed by the Company on Optional Redemption Date, the
Dividend Rate shall be adjusted on the Optional Redemption Date to the higher of (a) the Dividend
Rate or (b) the 10-year Fixed Rate Treasury Note benchmark yield as displayed on the PDST-F
screen of the PDEx page (or such successor page) of Bloomberg (or such successor electronic
service provider) at approximately 11:30 a.m. for the date corresponding to the Optional
Redemption Date plus a spread of 487.5 basis points.

Dividends on the Shares will be payable on March 5, June 5, September 5 and December 5 of each
year (each a Dividend Payment Date). The dividends on the Shares will be calculated on a 30/360-
day basis and will be paid quarterly in arrears on the last day of each 3-month Dividend Period
(each a Dividend Payment Date), as and if declared by the Board. If the Dividend Payment Date is
not a Banking Day, dividends will be paid on the next succeeding Banking Day, without adjustment
as to the amount of dividends to be paid.

The Board of Directors will not declare and pay dividends on any Dividend Payment Date where (a)
payment of the Dividend would cause the Company to breach any of its financial covenants or (b)
the profits available to the Company to distribute as dividends are not sufficient to enable the
Company to pay in full both the dividends on the Preferred Shares and the dividends on all other
classes of the Companys shares that are scheduled to be paid on or before the same date as the
dividends on the Preferred Shares and that have an equal right to dividends as the Preferred
Shares.

If the profits available to distribute as dividends are, in the Boards opinion, not sufficient to enable
the Company to pay in full on the same date both dividends on the Preferred Shares and the
dividends on other shares that have an equal right to dividends as the Preferred Shares, the
Company is required first, to pay in full, or to set aside an amount equal to, all dividends scheduled
to be paid on or before that dividend payment date on any shares with a right to dividends ranking
in priority to that of the Preferred Shares; and second, to pay dividends on the Preferred Shares and
any other shares ranking equally with the Preferred Shares as to participation in profits pro rata to
the amount of the cash dividends scheduled to be paid to them. The amount scheduled to be paid
will include the amount of any dividend payable on that date and any arrears on past cumulative
dividends on any shares ranking equal in the right to dividends with the Preferred Shares.

The profits available for distribution are, in general and with some adjustments, equal to the
Companys accumulated, realized profits less accumulated, realized loss.

Dividends on the Shares will be cumulative. If for any reason the Companys Board does not
declare a dividend on the Shares for a dividend period, the Company will not pay a dividend on the
Dividend Payment Date for that dividend period. However, on any future Dividend Payment Date on
which dividends are declared, holders of the Shares must receive the dividends due them on such
Dividend Payment Date as well as all dividends accrued and unpaid to the holders of the Shares
prior to such Dividend Payment Date.

Holders of Shares shall not be entitled to participate in any other or further dividends beyond the
dividends specifically payable on the Shares.

Redemption of the Preferred Shares

As and if declared by the Board, the Issuer may redeem the Preferred Shares on the fifth
anniversary from the Listing Date (the Optional Redemption Date) or any Dividend Payment Date
thereafter in whole (but not in part only), at a redemption price equal to the Issue Price of the
Shares plus accrued and unpaid dividends for all dividend periods up to the date of actual
redemption by the Company.

The Company has not established, and currently has no plans to establish, a sinking fund for the
redemption of the Preferred Shares.

The Company may purchase the Shares at any time in the open market or by public tender or by
private contract at any price through the PSE. The Shares so purchased may either be redeemed
and cancelled (after the Optional Redemption Date) or kept as treasury shares.

Early Redemption due to Taxation

If payments become subject to additional withholding or any new tax as a result of certain changes
in law, rule or regulation, or in the interpretation thereof, and such tax cannot be avoided by use of
reasonable measures available to the Company even before the Optional Redemption Date, the
Company may redeem the Preferred Shares in whole, but not in part, on any Dividend Payment
Date (having given not more than 60 nor less than 30 days notice) at the Offer Price plus all
accrued and unpaid dividends, if any.

Liquidation Rights in Respect of the Preferred Shares

The Preferred Shares will constitute the direct and unsecured subordinated obligations of the
Company ranking at least pari passu in all respects and ratably without preference or priority among
themselves with all other Preferred Shares issued by the Company.

In the event of a return of capital in respect of the Companys winding up or otherwise (whether
voluntarily or involuntarily) but not on a redemption or purchase by the Company of any of its share
capital, the holders of the Preferred Shares at the time outstanding will be entitled to receive, in
Pesos out of the Companys assets available for distribution to shareholders, together with the
holders of any other of the Companys shares ranking, as regards repayment of capital, pari passu
with the Preferred Shares and before any distribution of assets is made to holders of any class of
the Companys shares ranking after the Preferred Shares as regards repayment of capital,
liquidating distributions in an amount equal to the Issue Price of the Preferred Share plus an amount
equal to any dividends declared but unpaid in respect of the previous dividend period and any
accrued and unpaid dividends for the then-current dividend period to (and including) the date of
commencement of the Companys winding up or the date of any such other return of capital, as the
case may be. If, upon any return of capital in the Companys winding up, the amount payable with
respect to the Preferred Shares and any other of the Companys shares ranking as to any such
distribution pari passu with the Preferred Shares are not paid in full, the holders of the Preferred
Shares and of such other shares will share ratably in any such distribution of the Companys assets
in proportion to the full respective preferential amounts to which they are entitled. After payment
of the full amount of the liquidating distribution to which they are entitled, the holders of the
Preferred Shares will have no right or claim to any of the Companys remaining assets and will not be
entitled to any further participation or return of capital in a winding up.

Payments on the Preferred Shares

All payments in respect of the Preferred Shares are to be made free and clear of any deductions or
withholding for or on account of any present or future taxes or duties imposed by or on behalf of
Republic of the Philippines, including but not limited to, stamp, issue, registration, documentary,
value added or any similar tax or other taxes and duties, including interest and penalties. If such
taxes or duties are imposed, the Company will pay additional amounts so that holders of the
Preferred Shares will receive the full amount of the relevant payment which otherwise would have
been due and payable.

Provided, however, that the Company shall not be liable for: (a) the final withholding tax applicable
on dividends earned on the Preferred Shares prescribed under the National Internal Revenue Code
of 1997, (b) expanded value added tax which may be payable by any holder of the Preferred Shares
on any amount to be received from the Company under the Preferred Shares and (c) any
withholding tax on any amount payable to any holder of the Share or any entity which is a non-
resident foreign corporation. Provided, further, that all sums payable by the Company to tax-exempt
entities shall be paid in full without deductions for taxes, duties, assessments or governmental
charges provided said entities present sufficient proof of such tax-exempt status from the tax
authorities.

Documentary stamp tax for the primary issue of the Shares and the documentation, if any, shall be
for the account of the Company.

The standard taxes applicable to the subsequent sale of the Preferred Shares by any holder of the
Preferred Shares shall be for the account of the said holder.

No Pre-emptive Rights
There are no pre-emptive rights extended to holders of Preferred Shares over all share issuances of
the Company.

Transfer of Shares and Share Register

The Preferred Shares will be issued in scripless form through the electronic book-entry system of
SMC Stock Transfer Service Corporation as Registrar for the Offer, and lodged with PDTC as
Depository Agent on Listing Date through PSE Trading Participants nominated by the Applicants.
Legal title to the Shares will be shown in an electronic register of shareholders (the Registry of
Shareholders) which shall be maintained by the Registrar. The Registrar shall send a transaction
confirmation advice confirming every receipt or transfer of the Preferred Shares that is effected in
the Registry of Shareholders (at the cost of the requesting Shareholder). The Registrar shall send
(at the cost of the Company) at least once every quarter a Statement of Account to all Shareholders
named in the Registry of Shareholders, except certificated Shareholders and Depository
Participants, confirming the number of Shares held by each Shareholder on record in the Registry of
Shareholders. Such Statement of Account shall serve as evidence of ownership of the relevant
Shareholder as of a given date thereof. Any request by Shareholders for certifications, reports or
other documents from the Registrar, except as provided herein, shall be for the account of the
requesting Shareholder.

Initial placement of the Preferred Shares and subsequent transfers of interests in the Preferred
Shares shall be subject to normal Philippine selling restrictions for listed securities as may prevail
from time to time.

After Listing Date, Shareholders may request the Registrar, through their nominated PSE Trading
Participant, to (a) open a scripless registry account and have their holdings of the Preferred Shares
registered under their name (name-on-registry account), or (b) issue stock certificates evidencing
their investment in the Preferred Shares. Any expense that will be incurred in relation to such
registration or issuance shall be for the account of the requesting Shareholder.
Philippine law does not require transfers of the Preferred Shares to be effected on the PSE, but any
off-exchange transfers will subject the transferor to a capital gains tax that may be significantly
greater than the stock transfer tax applicable to transfers effected on an exchange. See Taxation.
All transfers of shares on the PSE must be effected through a licensed stock broker in the
Philippines.

Not convertible into Common Shares

The Preferred Shares shall not be convertible into Petrons common shares.
Other Rights and Incidents Relating to the Preferred Shares
Following are other rights and incidents relating to the Preferred Shares, which may also apply to
other classes of Petrons stock.

Directors
Unless otherwise provided by law or the Articles, the Companys corporate powers are exercised, its
business is conducted, and its property is controlled by the Board. Petron has 10 Directors who are
elected by holders of shares entitled to voting rights under the Articles of Incorporation during each
annual meeting of the shareholders for a term of one year. As mentioned, holders of Preferred
Shares are not entitled to vote for and elect the Companys Directors.

Petrons By-laws currently disqualify or deem ineligible for nomination or election to the Board any
person who is engaged in any business which competes with or is antagonistic to that of the
Company. Without limiting the generality of the foregoing, a person shall be deemed so engaged:

(a) If he is an officer, manager or controlling person of, or the owner (either of record or
beneficially) of 10% or more of any outstanding class of shares of, any corporation (other
than one in which the Company owns at least 30% of the capital stock) engaged in a
business which the Board determines by resolution to be competitive or antagonistic to that
of the Company;

(b) If he is an officer, manager, controlling person of, or the owner (either of record or
beneficially of 10% or more of any outstanding class of shares of any other corporation or
entity engaged in any line of business of the Company, if the Board determines by
resolution that the laws against combinations in restraint of trade shall be violated by such
persons membership in the Board.

(c) If the Board, in the exercise of its judgment in good faith, determines by resolution that such
person is the nominee of any person set forth in (a) or (b).
The Company conforms to the requirement to have at least one independent director or
such number of independent directors as may be required by law. As of the date of this
Prospectus, the Companys independent directors are Mr. Angelico T. Salud and Mr.
Reynaldo G. David.

The presence of six (6) of the directors shall constitute a quorum for the transaction of
business at any meeting. Except as otherwise agreed at any time by stockholders holding
at least eighty percent (80%) of the total issued and outstanding capital stock of the
Corporation, any act of the Board shall require the affirmative vote of at least seven (7)
directors. In the absence of a quorum, a majority of the directors present may adjourn any
meeting from time to time until a quorum is achieved. Notice of any adjourned meeting need
not be given.

Any vacancy other than that caused by the removal by the shareholders, expiration of the
term or increase in the number of directors on the Board, may be filled by the affirmative
vote of at least seven (7) of the remaining directors. Any director elected in this manner shall
serve only for the unexpired term of the director replaced.

Appraisal Rights
Philippine law recognizes the right of a shareholder to institute, under certain circumstances,
proceedings on behalf of the corporation in a derivative action in circumstances where the
corporation itself is unable or unwilling to institute the necessary proceedings to redress wrongs
committed against the corporation or to vindicate corporate rights, as for example, where the
directors themselves are the malefactors.
In addition, the Corporation Code grants a shareholder a right of appraisal in certain circumstances
where he has dissented and voted against a proposed corporate action, including:
An amendment of the Articles of Incorporation which has the effect of adversely affecting
the rights attached to his shares or of authorizing preferences in any respect superior to
those of outstanding shares of any class or shortening the term of corporate existence;
The sale, lease, exchange, transfer, mortgage, pledge or other disposal of all or substantially
all of the assets of the corporation;
The investment of corporate funds in another corporation or business for any purpose other
than the primary purpose for which the corporation was organized; and
A merger or consolidation.

In these circumstances, the dissenting shareholder may require the corporation to purchase his
shares at a fair value which, in default of agreement, is determined by three disinterested persons,
one of whom shall be named by the shareholder, one by the corporation, and the third by the two
thus chosen. The SEC will, in the event of a dispute, determine any question about whether a
dissenting shareholder is entitled to this right of appraisal. The dissenting shareholder will be paid if
the corporate action in question is implemented and the corporation has unrestricted retained
earnings sufficient to support the purchase of the shares of the dissenting shareholders.

Shareholders Meetings
At the annual meeting or at any special meeting of the Companys shareholders, the latter may be
asked to approve actions requiring shareholder approval under Philippine law.

Quorum
The Corporation Code provides that, except in instances where the assent of shareholders
representing two-thirds of the outstanding capital stock is required to approve a corporate act
(usually involving the significant corporate acts where even non-voting shares may vote, as
identified above) or where the by-laws provide otherwise, a quorum for a meeting of shareholders
will exist if shareholders representing a majority of the capital stock are present in person or by
proxy.

Voting
At each shareholders meeting, each shareholder shall be entitled to vote in person, or by proxy, all
shares held by him which have voting power, upon any matter duly raised in such meeting.

The Companys By-laws provide that proxies shall be in writing and signed and in accordance with
the existing laws, rules and regulations of the SEC. Duly accomplished proxies must be submitted to
the office of the Corporate Secretary not later than 10 business days prior to the date of the
stockholders meeting. No proxies shall be valid after three (3) years from its date unless such proxy
expressly provide for a longer period.

Fixing Record Dates

The Board has the authority to fix in advance the record date for shareholders entitled: (a) to notice
of, to vote at, or to have their votes voted at, any shareholders meeting; (b) to receive payment of
dividends or other distributions or allotment of any rights; or (c) for any lawful action or for making
any other proper determination of shareholders rights. The Board may, by resolution, direct the
stock transfer books of the Corporation be closed for a period not exceeding 50 days preceding the
date of any meeting of stockholders. The record date shall in no case be more than 60 days or less
than 35 days preceding such meeting of shareholders.

Accounting and Auditing Requirements/Rights of Inspection

Philippine stock corporations are required to file copies of their annual financial statements with the
SEC. Corporations whose shares are listed on the PSE are also required to file quarterly and annual
reports with the SEC and the PSE. Shareholders are entitled to request copies of the most recent
financial statements of the corporation which include a statement of financial position as of the end
of the most recent tax year and a profit and loss statement for that year. Shareholders are also
entitled to inspect and examine the books and records that the corporation is required by law to
maintain.

The Board is required to present to shareholders at every annual meeting a financial report of the
operations of the corporation for the preceding year. This report is required to include audited
financial statements.

Globe Telecom
Per the Prospectus dated May 18, 2012

Preferred Shares
Preferred stock at a par value of P5 per share of which 158 million shares are outstanding out of a
total authorized of 250 million shares.

Preferred stock has the following features:

a. Issued at P5 par;
b. Dividend rate to be determined by the Board of Directors at the time of Issue;
c. One preferred share is convertible to one common share starting at the end of the 10th year
of the issue date at a price to be determined by the Globes Board of Directors at the time of
issue which shall not be less than the market price of the common share less the par value
of the preferred share;
d. Call option Exercisable any time by Globe starting at the end of the 5th year from issue
date at a price to be determined by the Board of Directors at the time of the issue;
e. Eligibility of Investors Only Filipino citizens or corporations or partnerships wherein 60% of
the voting stock of voting power is owned by Filipino;
f. With voting rights;
g. Cumulative and non-participating;
h. Preference as to dividends and in the event of liquidation; and
i. No preemptive right to any share issue of Globe, and subject to yield protection in case of
change in tax laws.

The dividends for preferred shares are declared upon the sole discretion of the Globes Board of
Directors.

As of April 30, 2012, none of the preferred shares have been converted to common shares.
Robinsons Retail Holdings Inc.
Per the Prospectus dated October 24, 2013

The preferred stock has the following features:

a. Preferred stockholders are entitled to receive preferential but non-cumulative dividends at the
rate to be determined by the BOD of RBC.
b. Preferred stocks are redeemable at the option of RBC at any time provided that the redemption
price shall not be lower than the par value or higher than 110.00% of said par value.
c. In the event of any voluntary or involuntary liquidation, the preferred stockholders are entitled
to receive the liquidation value of the said shares equivalent to 110.00% of the par value plus
any unpaid but declared dividends thereon. If the net assets of RBC shall be insufficient to pay
in full the liquidation value of all the preferred stock, then such net resources shall be
distributed among such preferred stock ratably in accordance with the respective liquidation
value of the shares they are holding.